CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Create Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Create Account
✖

USD/CAD Unfazed by BoC Rate-Cut Ahead of Fed Decision

Article By: ,  Strategist
January 29, 2025 6:25 PM

US Dollar Outlook: USD/CAD

USD/CAD seems to be unfazed by the Bank of Canada (BoC) rate cut as it consolidates ahead of the Federal Reserve interest rate decision.

USD/CAD Unfazed by BoC Rate-Cut Ahead of Fed Decision

USD/CAD trades near the weekly high (1.4471) as the BoC lowers its benchmark interest rate to 3.00% from 3.25% at its first meeting for 2025, but it seems as though the central bank is nearing the end of its rate-cutting cycle as Governor Tiff Macklem and Co. acknowledge that ‘the cumulative reduction in the policy rate since last June is substantial.’

Join David Song for the Weekly Fundamental Market Outlook webinar.

David provides a market overview and takes questions in real-time. Register Here

In turn, the BoC may continue to adjust its forward guidance as ‘the economy is expected to strengthen gradually and inflation to stay close to target,’ but the transition in US trade policy may force the central bank to implement lower interest rates as ‘a long-lasting and broad-based trade conflict would badly hurt economic activity in Canada.’

US Economic Calendar

As a result, USD/CAD may continue to track the positive slope in the 50-Day SMA (1.4261) as the BoC pledges to ‘help the economy adjust,’ but more of the same from the Federal Open Market Committee (FOMC) may produce headwinds for the Greenback as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent’ at the end of this year.’

With that said, USD/CAD may consolidate over the remainder of the month if the Fed prepares US households and businesses for lower interest rates, but the exchange rate may further retrace the decline from the monthly high (1.4517) as it still holds above the moving average.

USD/CAD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView

  • USD/CAD may attempt to test the monthly high (1.4517) as it carves a series of higher highs and lows, with a close above the 1.4460 (61.8% Fibonacci extension) to 1.4480 (100% Fibonacci extension) region opening up 1.4590 (78.6% Fibonacci extension).
  • Next area of interest comes in around the 2020 high (1.4668), but failure to close above the 1.4460 (61.8% Fibonacci extension) to 1.4480 (100% Fibonacci extension) region may keep USD/CAD within the January range.
  • Lack of momentum to hold above 1.4370 (50% Fibonacci extension) may push USD/CAD back towards the 1.4280 (38.2% Fibonacci extension) to 1.4299 (April 2020 high) zone, with the next area of interest coming in around the monthly low (1.4261).

Additional Market Outlooks

AUD/USD Susceptible to Negative Slope in 50-Day SMA

USD/JPY Outlook Hinges on Federal Reserve Rate Decision

GBP/USD Breaks Above Weekly Range to Eye Monthly High

Gold Price Rally Fizzles to Keep RSI Below Overbought Zone

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

© FOREX.COM 2025